Bank of New York V. Stephen Silverberg Shows Problem With MERS in Miami

In Bank of New York v. Stephen Silverberg, the New York Supreme Court ruled that the bank filing a foreclosure against homeowners didn’t have standing because of a problem with MERS.

As Miami Foreclosure Lawyer Blog has previously pointed out, MERS — Mortgage Electronic Recording System — is a flawed system devised by the residential mortgage industry to track purchases and sales of homes. Along with robo-signing issues and other ways for Miami homeowners to fight foreclosure, Miami Foreclosure Lawyers will use any means necessary to help you stay in your home and hold banks accountable for their errors.
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In 1993, MERS was created as a private system so banks could keep track of sales at a quicker pace than county court clerk offices. But foreclosure defense lawyers have pointed out many flaws in the system. For instance, when a mortgage is sold, information is registered in MERS, but no assignment is recorded. So, if a homeowner faces a foreclosure, county records may not reflect whether the company, a trust of investors or another lender actually owns the house.

Enter the Silverbergs from Long Island. According to the recent court ruling in New York, they obtained a $450,000 loan from Countrywide Home Loans in 2006. According to the court ruling, the mortgage refers to MERS as the mortgagee and provides that the underlying promissory note is in favor of Countrywide. A year later, the couple took out a second mortgage from Countrywide and executed a consolidation agreement.

After defaulting on the consolidation agreement, MERS, as Countrywide’s nominee, assigned the agreement to the Bank of New York. On appeal, the couple argued that the bank doesn’t have standing to sue because it didn’t own the notes and mortgages at the time it commenced the foreclosure action. Neither MERS nor Countrywide ever transferred or endorsed the notes described in the consolidation agreement to the plaintiff.

The issue decided by the court is whether MERS, as nominee and mortgagee for purposes of recording, can assign the right to foreclose upon a mortgage to a plaintiff in a foreclosure action absent MERS’s right to, or possession of, the actual underlying promissory note. The court ruled that because MERS was never the lawful holder or assignee of the notes described and identified in the consolidation agreement, MERS was without authority to assign the power to foreclose to the plaintiff. MERS reportedly holds 60 million mortgage loans.

Miami foreclosure lawyers have seen the many problems caused by MERS and other tactics within the lending industry and how they have caused homeowners to unjustly lose their homes. We are committed to helping homeowners fend off banks that have filed incorrect paperwork and are unable to prove who actually owns the house on which they are attempting to foreclose. If you believe there are problems with your bank’s paperwork or simple want to fight foreclosure whatever the reason, call today.

If you are fighting foreclosure in Miami or the surrounding areas, contact Jacobs Keeley for a confidential appointment to discuss your rights. Call (305) 358-7991.